After the Russian invasion of Ukraine, when the first signs of a global crisis appeared, the smallest companies, for example, fuel purchases began to finance purchases through factoring – indicated the president of the National Fund, Dariusz Szkaradek. 18.5 percent SMEs have used this service at least once – according to the study “Impulses and barriers to the development of SMEs”.
Many Polish firms have overdue financial liabilities
According to the data of the National Debt Register, over 272,000 enterprises in Poland have 9.07 billion PLN of overdue financial liabilities. The average liability of one indebted company is 33.2000 zloty. “Those enterprises that do not get money from debtors, lose their financial liquidity and save themselves with a loan” – noted the president of KRD Adam Łącki.
He also referred to the NBP data, which show that in February the level of cash in circulation clearly increased – by 4.6%. compared to January and by 13.6 percent. compared to last year. “After Russia’s aggression against Ukraine, the smallest companies reacted just like private individuals, that is, they changed some deposits into cash for fear of a possible blocking of access to the banking system,” said the chairman of the KRD.
He added that the accumulation of rainy day cash by micro-companies began to be accompanied by other phenomena, including suspending investments, cancelling projects or resigning from long-term plans. “At the same time, rising operating costs, high prices of fuels, materials and services, as well as long waiting for payments from contractors made the protection of financial liquidity of key importance for entrepreneurs,” said Adam Łącki.
Polish expert: First signs of an international crisis
NFG President Dariusz Szkaradek emphasised that “in connection with Russia’s invasion of Ukraine, when the first signs of an international crisis appeared, the smallest companies began to finance with factoring, among others, the purchase of fuel or payments for employees”. He added that so far this form of financing “has been a remedy for long payment terms in commercial transactions”.
Szkaradek told PAP that until recently factoring was a service available only to large companies – for several years it can also be used by micro and small enterprises. He reminded that factoring is also called invoice defrosting; it consists in the factoring company purchasing the invoice issued to the contractor by the entrepreneur. The latter receives money from the factor for a service or good for which it would normally have to wait with payment from the contractor.
The survey of the National Debt Register and the National Guarantee Fund cooperating with it “Impulses and barriers in the development of SMEs” shows that three-quarters of small and medium-sized companies know the factoring service, and 18.5 percent used it at least once, waiting for payment from the contractor. Every second entrepreneur (56.8%) can indicate the advantages of factoring. The protection of financial liquidity was mentioned in the first place (22.3% of respondents).
In turn, every sixth company admits that factoring allows you to have money for which you would have to wait many weeks. Over 15 percent of the respondents appreciate that factoring allows you to pay off your current liabilities, thanks to which you do not have debts and are perceived as a reliable business partner.
In turn, 14.1 percent of respondents believe that it is “quick cash acquisition without unnecessary formalities”, and 8.4 percent. – believes that factoring does not create the need for additional debt. “The transaction is secured by an invoice for a service or product that has already been sold” – explained Szkaradek.
The nationwide study “Impulses and financial barriers in the development of SMEs”, commissioned by the National Debt Register of the Economic Information Bureau and the NFG factoring company, was conducted by IMAS International in December 2021 on a group of 512 companies from the micro, small and medium-sized enterprises sector.